Resources related to this episode:

Mike: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast. President Trump has nominated a new Health & Human Services Secretary. And to help us understand more about Alex Azar and where the nomination process goes from here, I am joined once again by Mike Merola, a founding partner of Winning Strategies Washington, a leading government relations firm based in Washington DC that specializes in hospital issues.

Mike, welcome back to the program.

Mike Merola: Thanks, Mike! Always a pleasure to spend time with you and your audience.

Mike: And it’s a pleasure to have you as always. So let’s jump right in!

What are people saying about Pres. Donald Trump’s choice of Alex Azar as Secretary of Health & Human Services? What’s the scuttlebutt?

Mike Merola: Sure! Well, no surprise. Most Republicans think he’s a great choice and have already endorsed him because he’s got both robust private sector experience and significant tenure working as a #2 guy at HHS during the George W. Bush administration. In that regard, he doesn’t have a steep learning curve. And I think, from their perspective, he can hit the ground running.

Also, he’s more of an under-the-radar guy as opposed to the way Secretary Price operated. So they’re hopeful that there won’t be any more private plane or other scandals while he’s there.

But it’s not unanimous. One Republican who doesn’t seem to be convinced yet is Sen. Rand Paul from Kentucky. You may have seen the Senate Health Committee had a nomination hearing. They don’t vote on his nomination. Only Senate Finance gets to vote on him. But they certainly get to question him. And Sen. Rand has spent a lot of time taking shots at Azar over high drug prices and the issue of re-importation.

Democrats on the other hand think he’s a complete shill for the pharmaceutical industry. At a time when there’s tremendous pressure to do something on the cost of prescription drugs and concern about issues on the Affordable Care Act, it’s definitely fair to say they’re not looking for anything to like about Azar.

Just as a specific example, before he went before the Health Committee, Senator Bernie Sanders put out a statement that said—I’m just going to paraphrase it—“This just goes to show that President Trump was never serious about his promise to stop the pharma industry from ‘getting away with murder.’”

And what I’ve heard a number of Democrats, both members and staff, say in private is that they’re concerned that because he spent a lot of time at HHS in a senior position already, that he knows how to pull all the right levers with the bureaucracy there and to get things done. And so they’ll be much more effective than Price. And they don’t mean that in a positive way.

Mike: Right! Great insights, Mike. What do you know about his view of the ACA and how he might go about implementing that law going forward?

Mike Merola: Sure! Well, he’s certainly been critical of ObamaCare in the past during the help hearing. He sort of skirted the question saying that he’d uphold the law of the land, but that he disagreed with many of the ACA’s policies. Specifically, he said, “We share the same goals. And many people are getting covered with affordable health insurance. But we disagree on the approaches and the tactics to get there.”

He also came out clearly against the individual mandate and said that if pieces of the law like the Navigator Program aren’t working, why should we keep funding them.

So, there was an interesting exchange between him and Senator Patty Murray from Washington who’s the top democrat on the committee. At one point, Azar asserted that he wanted the program to work for people. But he wouldn’t be pinned down on anything, and Murray was clearly unsatisfied by the response and said to him, “You’re confusing me.”

And Senator Warren from Massachusetts went even further saying that “You know, your predecessor came to us, lied through his teeth, and now you’re doing the same thing.”

So, the rhetoric is really hot around this nominee. But I think in terms of how he will approach the ACA, we’re going to just have to wait and see until he gets installed.

Mike: Okay. So, we talked about the political side and how members of Congress may view him.

Let’s talk about the industry and trade groups. So trade groups like the AHA have already praised him as the pick. What do their comments have in common?

Mike Merola: I think the thing they have most in common is their brevity and their sort of white bread nature. They all more or less say he’s qualified and we look forward to working with him which isn’t a surprise, right, because generally speaking, trade groups have every incentive to find things that they like in the HHS nominee because he/she holds a lot of sway over their issues. And I don’t think they’re being disingenuous, but I think the candidate would have to be really bad for groups like AHA or AEH or others to sort of come out swinging against them.

Mike: Right! And as you’ve touched on before, there’s already been a lot of discussion around his drug industry experience. And obviously, there are some concerns.

Perhaps there’s some benefits to that as well. And I think he’s tried to tout that in his comments. What can you talk about that or what can you tell us about that?

Mike Merola: Sure! You know, in terms of concerns, folks are most worried that pharma is going to have a very powerful ally at the top of the U.S. healthcare regulatory apparatus during this really important time on drug pricing, patent protections and the opioid epidemic too which is still getting a lot of attention in DC. These are among the most contentious issues that our government is grappling with right now.

President Trump has repeatedly, if only intermittently, vowed to bring down drug prices. And members of Congress have a number of bills in the hopper that are either favorable or not so favorable to pharma. So we’ll have to see how Azar will impact each of those.

A lot of others, as you’ve sort of referenced, have dismissed these worries saying that in order to solve the problems within the pharma industry, you’ve got to understand the way that the distribution system works and the way that the companies function overall, and that Mr. Azar understands this as well as anybody in the country.

What I’ve read about him is that he’s also someone who listens to all sides of an argument. And because he has such outstanding relationships with a lot of his former execs in the pharma industry, maybe there are some space for a Nixon to China moment where he’s able to corral them and bring them into a real discussion about actual solutions.

Mike: And as you also touched on, he’s a little bit different than his predecessor who was a physician. He’s an attorney and also a private sector executive in addition to his HHS experience. So he seems pretty well-rounded, but certainly quite different than his predecessor. How do you think that’s being perceived?

Mike Merola: I think generally positively. In many ways, he does have a better resume than Tom Price did for this job because Price came from a political background and he saw so many issues through a partisan lens. Azar is definitely going to have to earn the trust of Democrats though. I think many of whom agree—and I’ll just throw out another quote from Senator Warren from Massachusetts during the Health hearing. She said his experience is a “how-to guide for getting rich from government service.”

And there’s this whole other constituency too, right, in terms of the bureaucracy, the professionals at HHS who are going to have to work under him.

I think it’s probably fair to say that most of them are relatively pleased with the nomination. They may not agree with his politics. But it’s someone who will be able to fight for the agency with the White House and hopefully get the resources that they need as well.

Mike: And Azar’s first hearing was on November 29th. Next up is his hearing before the Senate Finance Committee which, as of this recording, is not scheduled. What can you expect there?

Mike Merola: Sure! Just in terms of timing, everything I’ve heard—I talked to committee staff late yesterday. And they think it’ll happen next week. There’s just a lot that they’re dealing with right now with tax reforms. So we’ll have to see if that holds.

But again, in many ways, it’s going to be a replay of the Health Committee hearing with the Democrats asking tough questions and getting him on the record on issues that they care about beyond the ACA, things like reproductive health, drug pricing like we’ve talked about.

They’re certainly not going to be friendly while Republicans are going to ask I imagine mostly softball questions that are just designed to allow him to sort of tout various parts of his resume and highlight his qualifications.

So, in 15 minutes, you and I could probably write the script for this hearing in many ways. But I don’t think there will be any surprises.

Mike: Well, Mike, as always, thanks for stopping by the show and providing some perspective on this key nomination for all of us who work in the healthcare industry.

Mike Merola: You’re very welcome. And happy holidays to you and your audience. And I’ll look forward to talk to you soon.

Follow our blog

*HFMA staff and volunteers determined that Transfer DRG Revenue Recovery Service and Easy Work Papers have met certain criteria developed under the HFMA Peer Review Process. HFMA does not endorse or guarantee the use of this service.